Trust services providers can potentially face enormous difficulties when complying with data requests under Europe’s data protection legislation, which gives individuals the right to ask for information held about them by third parties.
Especially in the trust context, an individual’s right for information may run counter to long-standing common law principles about the disclosure of trust information.
In contrast to discovery in litigation, this type of data gathering is also new to trust services providers. As the types of data requested are much wider, the costs of compliance quickly escalate. At the same time, the penalties for non-compliance are harsh.
To complicate matters, subjects access requests are frequently made as fishing expeditions to provide ammunition for potential litigation, trust professionals heard at the Mourant Trust and Private Client Conference in October.
While a trustee must account to the beneficiaries for the administration of the trust, trustees have typically a wide discretion to refuse information requests by beneficiaries, albeit under the supervision of the court.